Tech giants are busy laying off employees and reducing office space. In the process, they may create a new movement of entrepreneurs and startups—ones that will collaborate on affordable commercial real estate.
Angel investor Jason Calacanis predicted that All-In podcast that the big business winners in 2023 will be “dismissed tech workers who choose to take control of their own destiny and start a company.”
“I think those laid-off tech workers who get together in groups of two, three, or four—developers, product managers, people who actually build things—and start a company together are going to be very successful, and they’re going to make incredible lemonade.” from this lemon from this big tech layoff,” he said earlier this month.
From employees to entrepreneurs
Some employees who are entrepreneurs may come, for example from Meta, which recently laid off around 11,000 employees. Facebook owners are also shedding office space, to cut costs and due to remote work. On Friday, it was confirmed that it will sublease office space in Seattle no longer needed, according to Seattle Times. Also recently gave up real estate in New York City.
Subleased office space is usually leased at a discount, which can allow startups that can’t afford it, Colliers leasing expert Connor McClain told Seattle Times.
It’s not just Meta that has recently laid off workers and let go of real estate. So are many other major tech companies, including Microsoft, Salesforce, and Twitter.
Salesforce recently announced layoffs—roughly 10% of its staff—while also indicating it would shed real estate. CEO Marc Benioff spoke at an all-hands meeting.
Office rents ‘will fall’
“This is a bigger moment for cost restructuring, we want to take … somewhere between $3 and $5 billion out of the business,” he said. “When we look at how we do that, real estate will be a major part of it.”
The company is headquartered in San Francisco. A January 7 exchange between PayPal co-founder David Sacks and Tesla CEO Elon Musk highlighted the commercial real estate situation there. sack tweeted“Just offered office space in San Francisco (SOMA) at the same price as 2009. Yes.”
Musk replied, “It will come down.”
As they do, entrepreneurs emerging from tech layoffs can take advantage of cheaper real estate to house new businesses.
Of course, some startups may choose to save money by not renting commercial real estate and have everyone work from home. But as CEOs at big companies like Disney and Starbucks recently pointed out—while forcing remote workers to return to the office—there are clear business advantages to face-to-face collaboration.
As Disney CEO Bob Iger wrote to employees in a recent memo, “In a creative business like ours, nothing can replace the ability to connect, observe, and create with friends that comes from being physically together.”
This may be true for tech entrepreneurs who want to make lemonade from peeled lemons.
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